Financial Choices
The Economy
Budgeting
Taxes
Financial Management
100
What are the four priniples to manage money effectively?
Interest, Time Value of Money, Inflation, and Risk
100
What is the formula for the Rule of 72?
Divide 72 by the average annual interest rate This gives an estimate of how long it will take to double the amount invested
100
What is a Comprehensive budget?
Covers all aspects of financial life Know: Takes time to create; Must involve both spouses
100
What is the idea the US Tax Code is based upon?
Everyone should help finance the goverment according to one's ability to pay. Is this true in today's economy?
100
What are the two sources of money?
Yourself and someone else
200
What are the three things involved in the Simple Interest Calculation?
The principle amount, the interest rate, and the time in years (all mulitiplied together)
200
What is the difference between inflatioon and deflation?
Inflation: loss of currency value over time from increase in average prices Deflation: gain of value of currency overtime by decrease in average prices
200
True or False: An Appropriations budget shows the recurring income and expenses related to short term financial goals
False: Operating
200
What are the levels of goverrnment that impose taxes?
Local, State, and Federal
200
What is a Credit score?
Numerical score that rates a person's creditworthiness in the credit rating process
300
What does the Time Value of Money state?
The value of money will change over time
300
True or False: The cost of living efffets the value of the dollar in that area
True: Cost of living is higher on the coasts therefore things like housing will be cheeper in the Midwest than the coast
300
What is a continuous process of making financial decisions?
Financial planning
300
What are 3 of the examples given in Ch 8 of kinds of taxes?
Progressive Tax, Consumption Tax, Regressive Tax, Excise Tax, Estate Tax
300
What does FICO stand for and what does it do?
Fair Isaac Corporation- calculates your credit score: the higher the score, the more reliable you appear
400
What is the difference between an Annuity table and a Lump Sum table?
An annuity table estimates the value invested each year for a period of years based on the interest A Lump Sum table estimates the future value originally invested and compounded over a period of years
400
What does CPI stand for and what does it do?
Consumer Price Index-measures inflation by monitoring currency values over time for a defined bundle of products/services
400
What is Budget Variance?
The difference between actual results and expected results of financial activity
400
What kinds of income are taxes levied upon?
Wages, Interest, Self-Employment, Royalties, Gambling, Prizes, ect
400
What 5 factors determine your credit score?
Payment history, amounts currently owed, length of credit history, new credit issued, types of credit previously recieved
500
True or False: Compounding is always a good thing when applied to savings and debt.
False: It is good for savings but bad for debt you owe.
500
What are the four basic approaches to risk management?
Risk Avoidance Risk Reduction Risk Assumption Risk Shifting
500
What are the 6 steps of the Budget process?
1. Define goals and gather data 2. Form expectations amd reconcile goals/data 3. Create the budget 4. Monitor actua outcomes and analyze variances 5. Adjust budget, expectations, and/or goals 6. Redefine goals
500
What are the filing status choices on Federal Income Tax forms?
Single, Married, Married Filing Seperately, Head of Household
500
What is the fraud that occurs when the identity is used to access or creat accounts for financial gain?
Identity Theft
M
e
n
u